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Analysts expect that the UK jobless rate fell to fresh five-year lows in April, and continued outperformance in the labor market will put further pressure on the Bank of England to raise rates through the foreseeable future.

Indeed it was an important reversal in UK interest rate expectations that pushed the Sterling to fresh multi-year highs. Thus any significant disappointments in top-tier economic data could force GBP pullbacks. The bullish forecasts for the key figures leave risks to the downside for the British currency.

Those waiting for substantial GBP volatility may nonetheless need to wait for a change in broader market conditions; 1-week volatility prices on GBPUSD options have fallen near record lows. We may look to sell any important rallies as we see clear risk of a larger GBP turn lower. –DR

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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